The Most Important Thing Illuminated - Second-Level Thinking
1. The art of investment has one characterstic that is not generally appreciated. A creditable, if unspectular, result can be achieved by the lay investor with a minimum effort and capability; but to improve this easily attainable standard requires much application and more than a trace of wisdom
2. Few people have what it takes to be great investors - The reasons are simple. No rule always works. The enironment isnt controllable, and circumstances rarely repeat exactly. Psychology play a major role in markets, and because it's highly variable, cause-and-effect relationships arent reliable
3. One thing I want to emphasize is how essential it is that one's investment approach be intutive and adaptive rather than be fixed and mechanistic.
4. Successful investors want more than "market returns", they want to beat the market
5. Beating the market matters, but limiting risk matters just as much. Ultimately, investors have to ask themselves whether they are interested in relative or absolute returns.
6. In my view, that's the definition of successful investing: doing better than the market and other investors.
7. Would-be investors can take courses in finance and accounting, read widely and, if they are fortunate, receive mentoring from someone with a deep understanding of the investment process. But only a few of them will achieve the superior insight, intution, sense of vlaue and awareness of psychology that are required for consistently above-average results. Doing so requires second-level thinking.
8. In some pursuits, getting to the front of the pack means more schooling, more time in the gym or the library, better nutrition, more persipiration, greater stamina or better equipment. But in investing, where these things count less, it calls for more perceptive thinking...at what i call the second-level
9. Being right may be necessary condition for investment success, but it wont be sufficient. You must be more right than others...which by definition means your thinking has to be different.
10. What is second-level thinking ?
First-level thinking says "It's a good company; let's buy the stock". Second-level thinking says, "It's a good company, but everyone thinks it's a great company, and it's not. So, the stock's overrated and pverpriced; let's sell"
1. The art of investment has one characterstic that is not generally appreciated. A creditable, if unspectular, result can be achieved by the lay investor with a minimum effort and capability; but to improve this easily attainable standard requires much application and more than a trace of wisdom
2. Few people have what it takes to be great investors - The reasons are simple. No rule always works. The enironment isnt controllable, and circumstances rarely repeat exactly. Psychology play a major role in markets, and because it's highly variable, cause-and-effect relationships arent reliable
3. One thing I want to emphasize is how essential it is that one's investment approach be intutive and adaptive rather than be fixed and mechanistic.
4. Successful investors want more than "market returns", they want to beat the market
5. Beating the market matters, but limiting risk matters just as much. Ultimately, investors have to ask themselves whether they are interested in relative or absolute returns.
6. In my view, that's the definition of successful investing: doing better than the market and other investors.
7. Would-be investors can take courses in finance and accounting, read widely and, if they are fortunate, receive mentoring from someone with a deep understanding of the investment process. But only a few of them will achieve the superior insight, intution, sense of vlaue and awareness of psychology that are required for consistently above-average results. Doing so requires second-level thinking.
8. In some pursuits, getting to the front of the pack means more schooling, more time in the gym or the library, better nutrition, more persipiration, greater stamina or better equipment. But in investing, where these things count less, it calls for more perceptive thinking...at what i call the second-level
9. Being right may be necessary condition for investment success, but it wont be sufficient. You must be more right than others...which by definition means your thinking has to be different.
10. What is second-level thinking ?
First-level thinking says "It's a good company; let's buy the stock". Second-level thinking says, "It's a good company, but everyone thinks it's a great company, and it's not. So, the stock's overrated and pverpriced; let's sell"